Double-dip Recession

Posted in Finance, Accounting and Economics Terms, Total Reads: 650

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Definition: Double-dip Recession

Double-dip recession is a term often used to describe an economic scenario where the gross domestic product (GDP: which is a basic measure of economic activity/production) has slipped down to negative (in terms of relative percentage) after being positive for a few quarters. In times of extreme crisis in the economy, when lot of aggressive measure are being incorporated to revive and enhance the GDP, the measures work for a short while after which the GDP recede back to negative one.

Example:

lot of countries follow Keynesian principle of fighting recession by incentivizing spending and increasing the government’s stimulus packages. However, after few quarters, when the costs of such measures far exceed the benefits/growth, they withdraw the packages which result in a dip in GDP again. Hence the name double-dip recession. This is a similar scenario in India today.